KARACHI, June 1: Not much could be gleaned from the speech of the Finance Minister, Dr Abdul Hafeez Shaikh, on Friday. But most brokers and analysts who were busy examining the budgetary documents said that the Federal Budget 2011-12 could be summed up as ‘neutral’.

Prominent broker and a former chairman of the Karachi Stock Exchange Mr Arif Habib said that the big positive for the stock market was the making of Capital Gains Tax (CGT) Ordinance a part of the Finance Bill, 2012. This would provide relief for the investors in equities.

He said that it was good to see that the proposal of tax on dividend received by banks from money and income funds to be gradually increased in two years (2013: 25pc, 2014: 35pc) was not made applicable on equity funds.

It was also positive that the Federal Excise Duty on services of Asset Management Companies was to be abolished. Mr Arif Habib also thought that the reduction of turnover tax from one to 0.5 per cent would afford breathing space to the loss making companies.

Some of the market players were sore that most of the budget proposals presented by the KSE were ignored.

Stock broker, Haji Ghani Haji Usman said that he would have been happier if the proposal of making it mandatory for listed companies to pay 40 per cent of their profit in cash dividend to shareholders was accepted.

Other steps appreciated by the market included reduction of General Sales Tax to 16pc from 22pc; increase in tax rebate on IPO investment to 20pc from 15pc and reduction in maximum slab on custom duty to 30pc from 35pc.

Most analysts thought that sector-wise, the budget was kind to the cements, which found its wish fulfilled by reduction in Federal Excise Duty (FED), though by Rs100 per ton to Rs400 per ton, against higher reduction envisaged earlier.

Also the upward revision in PSDP to Rs873 billion was thought to give impetus to demand of cement, iron and steel and ancillary industries.

But fertilizer sector was believed to have been treated cruelly as the much feared Gas Infrastructure Development Cess (the Cess) has been increased on old fertilizer plants to Rs300 per mmbtu from Rs197 per mmbtu. The Pharma sector was a beneficiary since the duty on 88 pharmaceutical raw material and other input goods were reduced from 10 to 5 per cent.